'Generation rent' may be locked out of the property market for up to 30 years, charity warns

A shortage of affordable homes in England will lock some people out of the property market for up to 30 years, raising the prospect that an entire generation may never own their home, research published today has found.

Housing charity Shelter said its research showed ‘generation rent’ was here to stay after discovering it could take a single person living in London up to 30 years before their could afford to buy their own home.

The charity also found a couple with children in their mid-twenties faced up to 12 years of saving before they had a large enough deposit to buy their own home. It found that in 60 per cent of cases young families faced a minimum of a decade of saving before having enough money set aside to buy their own property.

Money pit: House prices are still too high that some people may never be able to afford to buy their own home, according to research by Shelter

Long haul: Shelter claims it could take some people up to ten years to save the deposit required to allow them to buy their own home

Childless couples face at least six years of hard saving before they could afford to apply for a mortgage.

The problem is even more acute in London where property prices have raced ahead of
the rest of the country by 6 per cent in the past year alone, according
to official figures released yesterday.

Childless couples living in
London face a gruelling 11 years of saving towards their mortgage
deposit before they can afford to buy a property in the capital, the report found. It said the average first time buyer deposit in London was now nearly £56,000 - only £10,000 shy of the national average house price twenty years ago.

The
study looked at earnings, house prices, rents, and spending on
essentials in local authorities across the country to show the true
extent of the challenge faced by households wanting to save up for a
deposit to buy a home in their area.

It found single people face the
greatest barriers to home ownership. The average single person could be
looking at saving for over 14 years before having a large enough
deposit to buy their own home unless they can find a partner, trapping
many in uncertain private renting or forcing them to live with their
parents well into adulthood.

Once again the situation is magnified
in London where it would take a single person 30 years before they could
buy their own home, while couples with children face 21 years of saving
towards a deposit.

Large deposits: Property values mean potential homeowners now have to save the kind of amounts their parents borrowed 30 years earlier before they can get a mortgage

There were
also significant regional variations in the report’s findings. Higher
outgoings and houseprices combined with lower incomes mean couples with
a child in Devon, Cornwall and Leicester would need longer to save for a
deposit than the same couple living in some areas of London.

The report comes after figures released
earlier this month showed the number of affordable homes completed
last year was down by 29 per cent from the previous year,
contributing to a chronic under-supply of homes, forcing up rents and
pushing house prices and deposits even further out of reach.

Real wage decreases: But most people have not see their wages keep up with either inflation or property values since the start of the financial crisis

‘Despite
working hard and saving what they can each month, today’s young people
face life-changing choices between starting a family or buying a home of
their own. Imagine a 28 year old couple weighing up their options: they
can save for a home now and put off starting a family until they’re 35,
or they can start a family now but accept they’ll be renting until
their child is a teenager,’ he said.

‘Meanwhile, single people face
an added pressure to either find a partner or to live with their parents
well into their thirties if they’re ever to have a hope of saving
enough for a deposit.

‘It seems the only ones with any hope left are
the few who can resort to the bank of mum and dad. But with so many
parents already feeling the squeeze, this is not a sustainable option.’

Yesterday official figures showed house prices continuing to rise with average prices nationally up 2.6 per cent in April on a year earlier.

The impact of the London and South East property markets was such that it accounted for nearly half the national increase. When the London market was stripped out of the calculations, said the Office of National Statistics, annual house prices increased by a more modest 1.4 per cent in the month. The average house price is now £238,000.

On Monday a separate report from Halifax found young people remain pessimistic about their chances of getting on the property ladder, with only a third prepared to save for a deposit for more than three years before giving up.

Its third annual Generation Rent report found the average deposit paid by first-time buyers in the first three months of this year was £26,956.

Halifax warned there is an increasing danger that the UK will be split permanently between those who can afford to own their home and those forced to rent their entire lives.

The report found 71 per cent of 20-45 year olds anticipate Britain is in danger of being divided by social and economic differences between homeowners and non-homeowners.

Over half (52%) predict Britain will become a nation of renters within the next generation while a third said the longest they were willing to save towards a deposit was three years.

Alarmingly, one fifth of non-homeowners aged 20 to 45 have already given up on the dream of owning their home completely, while 29 per cent say they have no plans to even start to save the money for a deposit.

Moreover, 57 per cent of renters believe they will be unable to retire if they have to rent all their life.

Craig McKinlay, mortgages director at Halifax said the survey revealed a changing social landscape in Britain. He said: ‘More needs to be done to redress the balance, both through making homeownership more accessible and offering more stability through the rental sector.’

ONE IN FIVE WILL RENT BY 2015 AS RENTS RISE 21% IN FIVE YEARS

Average rents in England and Wales are expected to hit £800 within
two years, an increase of 21 per cent since 2010, the operations director at the
largest lettings agency in the UK say today.

LSL Property Services forecasts that one in five people will
be living in rented accommodation by 2015 and that average rents in England
& Wales will reach £800 per month.

By next year 2014, rents will already average £765 per
month.

‘Fundamentally, buying a home is still becoming less
affordable, not more,’ Lucy Jones, of LSL Property Services will say.

In London average rents have increased by 18 per cent over
the last three years, with the latest increases touching 8 per cent a year.
Elsewhere, rents in the South West haven’t changed at all since 2010.

Rent rises: These maps show how rents are projected to increase in the next two years region by region

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'Generation rent' may be locked out of the property market for up to 30 years, Shelter warns